UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No.)
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Definitive
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Definitive
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Soliciting
Material Pursuant to § 240.14a-12
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Dorman Products,
Inc.
(Name
of Registrant as Specified In Its Charter)
Not Applicable
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Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of
Annual Meeting of Shareholders
May 22,
2008
Dear
Shareholder:
The
Annual Meeting of Shareholders of Dorman Products, Inc. (the terms “we”, “our”,
“us”, and the “Company” refer to Dorman Products, Inc.), a Pennsylvania
corporation, has been called and will be held at the law offices of Blank Rome
LLP, One Logan Square, Philadelphia, Pennsylvania 19103 on Thursday, May 22,
2008 at 8:30 a.m., Eastern Daylight Savings Time, to consider and act upon the
following matters:
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·
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Election
of six directors, each to serve for a term of one year to expire at the
next annual meeting of shareholders and until his successor has been
selected and qualified.
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·
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Any
other business as may properly come before the Annual
Meeting.
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The Board
of Directors has fixed the close of business on Friday, March 28, 2008, as the
record date for determining the Shareholders of the Company entitled to notice
of and to vote at such meeting and any adjournment thereof. If the
Annual Meeting is adjourned for one or more periods aggregating at least 15 days
because of the absence of a quorum, those shareholders entitled to vote who
attend the reconvened Annual Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in this Notice of Annual Meeting.
Whether
or not you intend to be present at the Annual Meeting, please date, sign and
mail the proxy card in the envelope provided. You are cordially
invited to attend the Annual Meeting and your proxy will not be used if you are
present and vote in person.
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By
Order of the Board of Directors
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/s/
Thomas J. Knoblauch
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THOMAS
J. KNOBLAUCH
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Vice
President, General Counsel and
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Assistant
Secretary
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Colmar,
Pennsylvania
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April
11, 2008
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IT
IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED
AND
PROMPTLY RETURNED.
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Dorman
Products, Inc.
3400
East Walnut Street
Colmar,
Pennsylvania 18915
Proxy
Statement
This
Proxy Statement and accompanying proxy card are for the solicitation of proxies
by the Board of Directors (the “Board”) of Dorman Products, Inc., a Pennsylvania
corporation (the terms “we”, “our”, “us”, and the “Company” refer to Dorman
Products, Inc.), for our use at our Annual Meeting of Shareholders (the “Annual
Meeting”) to be held on Thursday, May 22, 2008 at 8:30 a.m., Eastern Daylight
Savings Time, and any adjournments of the Annual Meeting. The Annual
Meeting will be held at the law offices of Blank Rome LLP, One Logan Square,
Philadelphia, Pennsylvania 19103. This Proxy Statement is being
posted to the Internet at http://www.stocktrans.com/eproxy/dorman2008
and Notice of Internet Availability was mailed to our shareholders on or about
April 11, 2008.
At the
Annual Meeting, the holders of record on Friday, March 28, 2008 (the
“Shareholders”) of our Common Stock, par value $.01 (the “Common Stock”), will
act upon the following matters:
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I.
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Election
of six directors, each to serve for a term of one year to expire at the
next annual meeting of shareholders and until his successor has been
selected and qualified.
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II.
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Any
other business as may properly come before the Annual
Meeting.
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You may
vote by mail, telephone, or on-line. All proxy cards which are
validly completed, signed and mailed to us prior to the Annual Meeting will be
voted in the manner designated. Proxies may be revoked at any time
prior to being voted at the Annual Meeting by written notice to our Corporate
Secretary or by attending the Annual Meeting and voting in person. If
no instructions are given, the persons named in the proxy solicited by the Board
intend to vote in favor of the election of the nominees named
herein. If any other matters properly come before the Annual Meeting,
the persons named in the accompanying proxy card will vote on these matters in
accordance with their best judgment.
The Board
has fixed the close of business on Friday, March 28, 2008 as the record date
(the “Record Date”) for the determination of shareholders entitled to receive
notice and to vote at the Annual Meeting and any adjournments of the Annual
Meeting. As of the close of business on the Record Date, there were
17,705,927 shares of Common Stock, issued and outstanding, each of which is
entitled to one vote. All share information set forth in this Proxy
Statement has been adjusted to reflect our two-for-one stock split in March
2005.
The
election of directors will be determined by a plurality vote and the six
nominees receiving the most “for” votes will be elected. An
abstention, withholding of authority to vote or broker non-vote will not have
the same legal effect as an “against” vote and will not be counted in
determining whether any nominee has received the required shareholder
vote.
Proposal I – Election of
Directors
Our
Amended and Restated By-Laws provide that our business shall be managed by or
under the direction of a Board of Directors of not less than two nor more than
seven directors, which number shall be fixed from time to time by the Board of
Directors. The Board of Directors has fixed the number of directors
at six. The Board of Directors has determined that four of the
members of the Board are independent as defined in the applicable listing
standards of the NASDAQ Stock Market. Each of the six directors shall
be elected at the Annual Meeting of Shareholders for a term that expires at the
next annual shareholder’s meeting. Each director shall hold office
for the term for which he was elected and until his successor is selected and
qualified. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the six nominees named below to constitute
the entire Board of Directors.
Our
Compensation and Nominating Committee is responsible for recommending qualified
candidates to the Board that the Board proposes for election by the
Shareholders. All of the nominees are current directors of the
Company and are nominated by the independent members of the Board of
Directors. All nominees were recommended to the Board by the
Compensation and Nominating Committee. Each nominee has consented to
being named in this Proxy Statement and has indicated a willingness to serve as
a director for the ensuing year, but in case any nominee is not a candidate at
the meeting for any reason, the proxy holders named in the enclosed proxy card
may vote for a substitute nominee in their discretion.
The
following table sets forth certain information, as of the Record Date, as to
each nominee for the office of director:
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Name
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Age
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Position
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Director
Since
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Richard
N. Berman
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51
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Chairman
of the Board of Directors, and Chief Executive Officer
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1978
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Steven
L. Berman
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48
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President,
Secretary-Treasurer, and Director
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1978
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George
L. Bernstein
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76
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Director
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1991
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John
F. Creamer, Jr.
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77
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Director
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1995
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Paul
R. Lederer
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68
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Director
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1998
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Edgar
W. Levin
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75
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Director
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1991
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The
following information about our directors is based, in part, upon information
supplied by such persons. Unless otherwise indicated, each individual
has had the same principal occupation for more than five years.
Richard
N. Berman has been Chairman of the Board of Directors and Chief Executive
Officer of the Company since October 24, 2007. Prior to that date, he
served as Chairman of the Board of Directors, President and Chief Executive
Officer since the Company’s inception in October 1978.
Steven L.
Berman has been President, Secretary-Treasurer and a director of the Company
since October 24, 2007. Prior to that date he served as Executive
Vice President, Secretary-Treasurer and a director of the Company since its
inception.
2
George L.
Bernstein has served as a director since 1991. Mr Bernstein has been
President of GLB Consulting, a management consulting firm located in
Philadelphia, PA, since 2002. He was Chief Financial Officer of
Howard Fischer Associates International, Inc., an executive search firm, from
1994 to 2002. Previously he was Chief Operating Officer of Dilworth,
Paxson, Kalish & Kauffman, a law firm in Philadelphia, Pennsylvania that he
joined in 1991.
John F.
Creamer, Jr. has served as a director since 1995. Mr. Creamer is
currently President of Distribution Marketing Services, Inc., a marketing
consulting firm for the automotive aftermarket located in Phoenix,
Arizona. He is a former director and former vice chairman of the
Board of Directors of Echlin Corporation, an automotive parts company, and past
president of the Automotive Warehouse Distributors Association
(AWDA).
Paul R.
Lederer has served as a director since 1998. Mr. Lederer is past
Executive Vice President of Federal-Mogul Corporation, a global manufacturer of
a broad range of non-discretionary parts primarily for automobiles, light
trucks, heavy trucks, and farm and construction vehicles. Prior to
joining Federal-Mogul, Mr. Lederer was President and Chief Operating Officer of
Fel-Pro Incorporated, a private manufacturer of gaskets and related products for
the internal combustion engine, which was acquired by Federal-Mogul in
1998. Before joining Fel-Pro, he was a consultant to several
automotive parts companies. Mr. Lederer is currently a director of
O’Reilly Automotive, an automotive parts retailer, Proliance International,
Inc., an automotive parts company, and Maximus, Inc., a provider of program
management and consultative services to state and local
governments.
Edgar W.
Levin has served as a director since 1991. Mr. Levin has been
President of Ed Levin Associates, a management consulting firm, located in Avon
Connecticut, since 1988. Prior thereto, from 1984 to 1988, he was
Senior Vice President of Paramount Communications, Inc. (Gulf & Western,
Inc.), a media and entertainment company.
None of
the above nominees, except for Richard and Steven Berman who are brothers, are
related to any other nominee or to any executive officer of the
Company.
Committees
of the Board of Directors
The Board
has three standing committees: the Executive Committee, the Audit
Committee and the Compensation and Nominating Committee.
Executive
Committee. The Executive Committee has general authority over
the supervision and direction of the finances and business of the Company and
has the power and authority of the Board in the management of the business and
affairs of the Company between meetings of the Board. Currently,
Richard N. Berman and Steven L. Berman serve on the Executive
Committee.
Audit
Committee. The Audit Committee is responsible for reviewing
reports of our financial results, audits and internal controls. The
Audit Committee selects our independent registered public accounting firm,
reviews such firm’s procedures for ensuring their independence with respect to
the services performed for us and pre-approves the professional services
provided by the independent registered public accounting firm. The
responsibilities of the Audit Committee are further described in the Audit
Committee Charter adopted by the Board of Directors, a copy of which is
available on the Company’s website at www.dormanproducts.com.
Currently,
George L. Bernstein (Chairman), John F. Creamer, Jr., Paul R. Lederer and Edgar
W. Levin serve on the Audit Committee. Each member of the Audit
Committee, in the opinion of the Board of Directors, is independent as defined
under the applicable listing standards of the NASDAQ Stock
Market. The Board has determined that Mr. Bernstein qualifies as an
audit committee financial expert as defined by the rules of the Securities and
Exchange Commission.
3
Compensation and
Nominating Committee. The Compensation and Nominating
Committee is responsible for annually reviewing, approving and recommending to
the Board of Directors for its approval, the compensation of our Chairman and
Chief Executive Officer and all of our other executive officers. The
Compensation and Nominating Committee also approves participation in and all
awards, grants and related actions under the Dorman Incentive Stock Plan, the
Employee Stock Purchase Plan and the 401(k) Retirement Plan. The
Compensation and Nominating Committee is also responsible for recommending
qualified candidates to the Board for election as directors of the Company, and
has recommended to the Board the slate of directors that the Board proposes for
election by shareholders at the Annual Meeting. The responsibilities
of the Compensation and Nominating Committee are further described in the
Compensation and Nominating Committee Charter adopted by the Board of Directors,
a copy of which is available on the Company’s website at www.dormanproducts.com.
Currently,
George L. Bernstein, John F. Creamer, Jr., Paul R. Lederer and Edgar W. Levin
(Chairman) serve on the Compensation and Nominating Committee. Each
member of the Compensation and Nominating Committee, in the opinion of the Board
of Directors, is independent as defined under the applicable listing standards
of the NASDAQ Stock Market.
The
information on the website listed above and elsewhere in this Proxy Statement is
not and should not be considered part of this Proxy Statement and is not
incorporated by reference in this document. This website is and is
only intended to be an inactive textual reference.
Director
Nomination Process
The
Compensation and Nominating Committee is responsible for, among other matters,
annually presenting to the Board of Directors a list of individuals recommended
for nomination for election as directors at the annual meeting of
shareholders. The Compensation and Nominating Committee assists the
Board of Directors in identifying, interviewing and recruiting candidates as
necessary for the Board of Directors. The Compensation and Nominating
Committee also has the authority as it deems appropriate to retain a search firm
to identify and evaluate director candidates.
Before
recommending a director, the Compensation and Nominating Committee reviews his
or her qualifications as described below. In the case of an incumbent
director, the Compensation and Nominating Committee also reviews the director’s
service to the Company during the past term, including the number of Board and
committee meetings attended, quality of participation and whether the candidate
continues to meet the qualifications for a director as described
below. After completing this evaluation, the Compensation and
Nominating Committee makes a formal recommendation to the full Board of
Directors as to election or re-election of the candidate.
Director
Candidates Nominated by Shareholders
Under our
Amended and Restated By-Laws, shareholders entitled to vote in the election of
directors at the meeting at which directors are to be elected may nominate one
or more persons for election as a director by personally delivering or mailing a
letter addressed to our President at 3400 East Walnut Street, Colmar,
Pennsylvania 18915 via a nationally-recognized express mail service or the
United States mail, postage prepaid. Such letter must be received by
us not less than one hundred and twenty (120) days prior to the date one year
from the date of the immediately preceding annual meeting of shareholders. In
the event of a special meeting of shareholders, the letter must be received not
later than the close of business on the tenth day following the day on which
notice of the special meeting was first given to shareholders.
4
The
following information must be included in the letter:
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·
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Name
and address of shareholder intending to make the nomination and of the
person or persons to be nominated;
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·
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A
representation that the shareholder is a shareholder of record and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice;
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·
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A
description of all arrangements and understandings between the shareholder
and each nominee and any other person or persons pursuant to which the
nomination was made;
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·
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Such
other information regarding each nominee proposed by such shareholder as
would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had the nominee
been nominated by the Board of Directors;
and
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·
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The
written consent of each nominee to serve as a director of the Company if
so elected.
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A
nomination specified in the letter may be presented at the meeting only by the
shareholder who gave such letter, in person or by proxy. The
presiding officer of the meeting may declare invalid any nomination not made in
compliance with the foregoing procedure.
Director
Qualifications
In order
to be nominated for director, a director candidate must be a natural person at
least eighteen (18) years of age. In addition, director
qualifications include, among other factors, capability, availability to serve,
conflicts of interest and moral character. Additional special
criteria apply to directors being considered to serve on a particular committee
of the Board of Directors. For example, members of the Audit
Committee must meet additional standards of independence and have the ability to
read and understand our financial statements.
Meetings
of the Board of Directors and Committees
During
the fiscal year ended December 29, 2007, the Board of Directors held five
meetings. The Executive Committee did not hold any meetings, the
Audit Committee held four meetings and the Compensation and Nominating Committee
held one meeting during the fiscal year ended December 29,
2007. During the fiscal year ended December 29, 2007, each director
attended at least 75% of the meetings of the Board and Committees of which they
were a member.
Director
Independence
The Board
of Directors has determined that the following directors, constituting a
majority of the members of the Board, are independent as defined in the
applicable listing standards of the NASDAQ Stock Market: George L.
Bernstein, John F. Creamer, Jr., Paul R. Lederer and Edgar W.
Levin. During its review of director independence, the Board of
Directors considered transactions and relationships between each independent
director or any member of his or her immediate family (or any entity of which an
independent director or an immediate family member is an executive officer,
general partner or significant equity holder) and the Company and its
subsidiaries and affiliates. There were no transactions or
relationships between independent directors or any member of their immediate
family (or any entity of which an independent director or an immediate family
member is an executive officer, general partner or significant equity holder)
considered by the Board of Directors and which were not disclosed in “Certain
Relationships and Related Transactions” below.
5
Attendance
at Annual Meeting of Shareholders
It is the
policy of the Board of Directors that, absent sufficient cause, all of our
directors attend our Annual Meeting of Shareholders. All of our
directors attended last year’s Annual Meeting of Shareholders.
Communication
with the Board of Directors
Shareholders
may communicate with the Board of Directors or any individual director by
sending a letter addressed to the Board of Directors or the individual director
c/o Dorman Products, Inc. at 3400 East Walnut Street, Colmar, Pennsylvania
18915. All shareholder communications will be delivered to the
director to whom such correspondence is addressed.
Director
Compensation
The
following table sets forth certain information regarding the annual and
long-term compensation earned by or awarded to each non-employee director who
served on our Board of Directors during the fiscal year ended December 29,
2007. Directors who are our employees are not compensated for their
services as directors.
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Name
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Fees
Earned or Paid
in
Cash
($)
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Option
Awards
(1)
($)
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All
Other
Compensation
($)
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Total
($)
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||||||||||||
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(a)
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(b)
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(d)
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(g)
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(h)
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George
L. Bernstein
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$ | 50,900 | - | - | $ | 50,900 | ||||||||||
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Edgar
W. Levin
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46,000 | - | - | 46,000 | ||||||||||||
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John
F. Creamer, Jr.
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45,500 | - | - | 45,500 | ||||||||||||
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Paul
R. Lederer
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45,500 | - | - | 45,500 | ||||||||||||
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(1)
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No
annual stock option grants were made as compensation for director services
in 2007. As of fiscal year ended December 29, 2007, the
aggregate number of option awards held by each of our non-employee
directors is as follows: George L. Bernstein – 52,000; Edgar W.
Levin – 48,000; John F. Creamer, Jr. – 6,000; and, Paul R. Lederer –
50,000.
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Each of
our non-employee directors receives an annual retainer of $37,500 plus $1,500
for each Board of Directors meeting attended and $1,000 for each Committee
meeting attended. The Chairman of the Audit Committee receives an
additional $1,350 for each Audit Committee meeting attended. The
Chairman of the Compensation and Nominating Committee receives an additional
$500 for each Compensation and Nominating Committee meeting
attended. Directors are also eligible for participation in our
Incentive Stock Plan,
however, no option awards were granted to directors in fiscal
2007. We do not grant shares of stock nor pay non-equity incentive
plan compensation to our directors. Our directors do not participate
in a company-sponsored pension or deferred compensation plan. As a
result, columns relating to these items have been deleted from the table
above.
The
Board Recommends a Vote “For” the Election of the Nominees listed above as
Directors.
6
Executive
Compensation
The
following table sets forth certain information regarding the annual and
long-term compensation earned during the fiscal year ended December 29, 2007 by
the Chief Executive Officer, the Chief Financial Officer and the three most
highly compensated executive officers whose aggregate salaries and bonuses
exceeded $100,000 for services rendered in all capacities during the fiscal year
ended December 29, 2007 (collectively referred to as the named executive
officers).
Summary
Compensation Table*
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Name
and Principal
Position
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Year
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Salary
($)
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Bonus
($)
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Option
Awards
($)
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All
Other
Compensation
(1)
($)
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Total
($)
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||||||||||||||||
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(a)
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(b)
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(c)
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(d)
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(f)
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(i)
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(j)
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Richard
N. Berman
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2007
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$ | 499,500 | $ | 343,459 | - | $ | 9,000 | $ | 851,959 | ||||||||||||
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Chairman
of the Board, Chief Executive Officer
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2006
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485,000 | 125,000 | - | 8,800 | 618,800 | ||||||||||||||||
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Steven
L. Berman
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2007
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499,500 | 343,459 | - | 9,000 | 851,959 | ||||||||||||||||
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President,
Secretary-Treasurer and Director
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2006
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485,000 | 125,000 | - | 8,800 | 618,800 | ||||||||||||||||
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Mathias
J. Barton
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2007
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273,017 | 179,170 | - | 9,000 | 461,187 | ||||||||||||||||
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Senior
Vice President, Chief Financial Officer
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2006
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265,065 | 50,000 | - | 8,800 | 329,865 | ||||||||||||||||
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Joseph
M. Beretta
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2007
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270,689 | 154,170 | - | 9,000 | 433,859 | ||||||||||||||||
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Senior
Vice President, Product
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2006
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262,805 | 50,000 | - | 8,800 | 329,105 | ||||||||||||||||
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Fred
V. Frigo
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2007
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230,587 | 154,170 | - | 9,000 | 393,757 | ||||||||||||||||
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Senior
Vice President, Operations
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2006
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223,871 | 50,000 | - | 8,800 | 282,671 | ||||||||||||||||
____________________________
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*
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As
part of the named executive officers’ annual compensation, we provide
certain perquisites and other personal benefits, including an annual
automobile allowance, which are not included in the table since the total
to each of the individuals named above did not exceed $10,000 in fiscal
2007 and 2006.
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Includes
the estimated contribution to the Company’s 401(k) Plan on behalf of each
of the named executives.
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Elements
of compensation for our named executive officers include salary, bonus, option
awards, and other perquisites, which are not included in the table above because
the total amount of perquisites provided to each of our named executive officers
did not exceed $10,000 in fiscal 2007 and 2006. The base salaries for
the named executive officers were set by our compensation committee at the
compensation committee meeting in December of 2007 at which time the committee
also approved the executive incentive plan for fiscal 2008. No
options were granted to our named executive officers in fiscal
2007. Our executive compensation philosophy, process, and programs
are more fully discussed in the Compensation Discussion and Analysis section of
this Proxy Statement. We do not grant shares of stock nor pay
non-equity incentive plan compensation to our named executive
officers. Our named executive officers do not participate in a
company-sponsored pension or deferred compensation plan. As a result,
columns relating to these items have been deleted from the table
above.
7
Grants
of Plan-Based Awards in Fiscal Year Ended December 29, 2007
We did
not grant stock options during the fiscal year ended December 29, 2007 to our
named executive officers. As a result, we have not included the
Grants of Plan Based Awards table in this Proxy Statement.
Outstanding
Equity Awards Value at Fiscal Year Ended December 29, 2007
The
following table includes certain information with respect to the value of all
unexercised options previously awarded to the named executive officers named at
December 29, 2007.
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Option
Awards
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|||||||||||||||||||||
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Name
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Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
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Option
Expiration
Date
|
||||||||||||||||
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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||||||||||||||||
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Richard
N. Berman Chairman of
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- | - | (1 | ) | - | - | - | ||||||||||||||
| the Board and Chief Executive | |||||||||||||||||||||
| Officer | |||||||||||||||||||||
|
Steven
L. Berman Executive
|
- | - | (1 | ) | - | - | - | ||||||||||||||
| President Secretary-Treasurer and | |||||||||||||||||||||
| Director | |||||||||||||||||||||
|
Mathias
J. Barton Senior Vice
|
75,000 | - | (2 | ) | - | $ | 1.50 |
7/8/2011
|
|||||||||||||
|
President, Chief
Financial Officer
|
36,000 | 9,000 | (3 | ) | - | 5.08 |
5/30/2013
|
||||||||||||||
| 12,000 | 8,000 | (4 | ) | - | 12.48 |
1/3/2015
|
|||||||||||||||
|
Joseph
M. Beretta Senior Vice
|
66,666 | 33,334 | (5 | ) | - | 8.01 |
2/2/2014
|
||||||||||||||
|
President,
Product
|
12,000 | 8,000 | (4 | ) | - | 12.48 |
1/3/2015
|
||||||||||||||
|
Fred
V. Frigo Senior Vice
|
10,000 | - | (6 | ) | - | 0.50 |
11/15/2009
|
||||||||||||||
|
President,
Operations
|
20,000 | - | (7 | ) | - | 1.50 |
7/9/2011
|
||||||||||||||
| 10,000 | - | (8 | ) | - | 4.00 |
6/30/2012
|
|||||||||||||||
| 32,000 | 8,000 | (9 | ) | - | 7.14 |
12/18/2013
|
|||||||||||||||
| 12,000 | 8,000 | (4 | ) | - | 12.48 |
1/3/2015
|
|||||||||||||||
|
(1)
|
Richard
N. Berman and Steven L. Berman have not received option
awards.
|
|
(2)
|
These
options vested in five equal annual installments beginning on July 9,
2002.
|
|
(3)
|
These
options vest in five equal annual installments beginning on May 30,
2004.
|
|
(4)
|
These
options vest in five equal annual installments beginning on January 3,
2005.
|
|
(5)
|
These
options vest in five equal annual installments beginning on February 2,
2005.
|
|
(6)
|
These
options vested in five equal annual installments beginning on November 15,
1999.
|
|
(7)
|
These
options vested in five equal annual installments beginning on July 9,
2001.
|
|
(8)
|
These
options vested in five equal annual installments beginning on June, 20,
2002.
|
|
(9)
|
These
options vest in five equal annual installments beginning on December 18,
2003.
|
We do not
grant shares of stock to our named executive officers. As a result,
columns related to stock awards have been deleted from the table
above.
8
Option
Exercises and Stock Vested in Fiscal Year Ended December 29, 2007
There
were no stock options exercised by any of the named executive officers during
fiscal year ended December 29 2007. We currently do not grant stock
awards as part of our Incentive Stock Plan. As a result, we have not
included the Grants of Plan Based Awards table in this Proxy
Statement.
Incentive
Stock Plan
Our Board
of Directors has adopted, and our shareholders have approved, an Incentive Stock
Plan (the “Plan”), the purpose of which is to recognize the contributions made
to us by our employees, consultants, advisors and members of our Board of
Directors, to provide these individuals with additional incentives to devote
themselves to our future success and to improve our ability to attract, retain
and motivate individuals upon whom our sustained growth and financial success
depend.
The Plan
is administered by the Board of Directors, or by a committee designated by the
Board of Directors. The aggregate maximum number of shares of Common
Stock available for awards under the Plan are 2,345,000 shares (subject to
adjustments to reflect changes in our capitalization). Awards under
the Plan may be made to all of our employees, consultants, advisors and
directors, although no director may receive awards for more than 10% of the
shares reserved for issuance under the Plan.
Options
granted under the Plan may be either incentive stock options (“ISOs”) or
non-incentive stock options (“NSOs”) (together, the “Options”). ISOs
are intended to qualify as “incentive stock options” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). Unless the Option is specifically designated at the time of
grant as an ISO, Options under the Plan will be NSOs.
The
exercise price of the ISOs will be at least 100% of the fair market value of the
shares of Common Stock on the date the Option is granted, or, at least 110% of
the fair market value of the shares of Common stock on the date the Option is
granted if the recipient owns, directly or by attribution under Section 425(d)
of the Code, shares possessing more than 10% of the total combined voting power
of all classes of our stock. The option price for NSO will be set at
the discretion of the Board of Directors, and may be less than, greater than or
equal to the fair market value of a share on the date of the
grant. The maximum term of an Option granted under the Plan shall not
exceed (i) ten years from the date of grant, or (ii) in the case of an ISO, five
years from the date of grant if the recipient on the date of grant owns,
directly or by attribution under Section 425(d) of the Code, shares possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary.
As of
December 29, 2007, there were options to purchase 903,150 shares of Common Stock
outstanding under the Plan. Shares available for future grant under
the Plan amounted to 295,636 shares as of December 29, 2007.
Employee
Stock Purchase Plan
The Board
of Directors has adopted, and our shareholders have approved, the 1992 Employee
Stock Purchase Plan (the “1992 Plan”) the purpose of which is to advance our
interests, its shareholders and employees by encouraging its employees to
acquire a vested interest in our growth and earnings.
Under the
1992 Plan, a committee appointed by the Board consisting initially of a minimum
of two and a maximum of seven members of the Board will administer the 1992 Plan
(the “Committee”). The aggregate maximum number of shares of Common
Stock available for grants under the 1992 Plan is 600,000 shares, (with suitable
adjustments to reflect changes in our capitalization). As of December
29, 2007, optionees had exercised rights to purchase 186 shares at prices
ranging from $11.65 to $12.32 for total net proceeds of
$2,000. Grants under the 1992 Plan may be made to all employees of
the Company, although no employee may receive such a grant if immediately after
the grant he would own more than 5% of the Company’s Common Stock or which, at
the date the option is granted, would permit such person’s rights to purchase
stock under the 1992 Plan and all of our other employee stock purchase or option
plans, or its parent or subsidiaries, if any, to accrue at a rate exceeding
$25,000 of the fair market value of such stock (determined at the time such
option is granted) for each year such option is outstanding.
9
If the
Committee decides to issue options pursuant to the 1992 Plan, options must be
granted to all of our employees who have been employed for at least 90 days,
other than those employees whose customary employment is 20 hours or less per
week and those employees whose customary employment is for not more than five
months in any calendar year. All options will expire on the last day
of the fiscal year during which the option was granted. The option
price will equal 85% of the fair market value of the shares on the date of
exercise.
The 1992
Plan is intended to qualify as an “employee stock purchase plan” within the
meaning of Section 423 of the Code. Under the Code, an employee who
is granted an option under the 1992 Plan will not realize income at either the
time of grant of the option, or upon exercise of the option. If an
employee disposes of shares acquired upon exercise of an option after two years
from the date of grant of such option and after one year from the date of
exercise of such option, the employee will be required to include in income, as
compensation for the year in which such disposition occurs, an amount equal to
the lesser of (i) the excess of the fair market value of such shares at the time
of disposition over the exercise price or (ii) the excess of the fair market
value of such shares at the time the option was granted over the exercise
price. The employee’s basis in the shares disposed of will be
increased by an amount equal to the amount so includible in his or her income as
compensation, and any gain or loss computed with reference to such adjusted
basis which is recognized at the time of disposition will be long-term capital
gain or loss. In such event, we (or our subsidiary by which the
employee is employed) will not be entitled to any deduction from
income.
If any
employee disposes of the shares purchased under the 1992 Plan within such two
year and one year period, the employee will be required to include in income, as
compensation for the year in which such disposition occurs, an amount equal to
the excess of the fair market value of such shares on the date of purchase over
the exercise price. The employee’s basis in such shares disposed of
will be increased by an amount equal to the amount includible in his or her
income as compensation, and any gain or loss computed with reference to such
adjusted basis which is recognized at the time of disposition will be capital
gain or loss, either short-term or long-term, depending on the holding period
for such shares. In the event of a disposition within such two year
or one year period, we (or our subsidiary by which the employee is employed)
will be entitled to a deduction from income equal to the amount the employee is
required to include in income as compensation as a result of such
disposition.
The Board
of Directors may modify or amend the 1992 Plan in any way which will not destroy
the status of the 1992 Plan as a qualified employee stock purchase plan as
defined in Section 423 of the Code, but no such amendment or modification may
affect options granted under the 1992 Plan prior to the date of such amendment
or modification.
401(k)
Retirement Plan
On
January 1, 1992, we adopted the amended and restated Dorman Products, Inc.
401(k) Retirement Plan and Trust (the “401(k) Plan”), a defined contribution
discretionary profit-sharing plan. The 401(k) Plan is administered by
a third-party administrator and is available to all employees once they have met
certain age and service requirements. Individual accounts are
maintained for the cash contributions made on behalf of each eligible employee
and each eligible employee has a choice of investment options from among a
variety of mutual funds and professionally managed accounts as to the
contributions to his account. There are two types of contributions to
the 401(k) Plan: (1) an employee can make a voluntary contribution of
the employee’s compensation which we deduct from the employees normal
compensation (legal limitations may restrict the maximum voluntary contribution
by an employee in any given year); and (2) we may make discretionary
contributions, in cash, common stock or a combination thereof, which is
allocated among the participants based on the employee’s annual compensation
compared to the total annual compensation of all eligible
employees.
10
Benefits
are payable at age 65 (normal retirement), total disability, death, or upon
early employment termination. There are vesting requirements for our
contributions, but not for the employee’s voluntary
contributions. The vesting schedule provides for twenty percent
vesting each year after one year of service, with one hundred percent vesting at
six years or more.
For the
fiscal year ended December 29, 2007, we contributed an amount equal to four
percent of each eligible employee’s annual compensation (with certain
limitations to highly compensated employees). Our contribution was
funded entirely in cash.
Employment
Agreements
On April
1, 2008, we entered into individual employment agreements with each of Richard
N. Berman, Chairman of the Board and CEO, and Steven L. Berman, President and
COO. The agreements have an initial term of three years expiring
March 31, 2011. On each anniversary of the effective date, the term
of each agreement will automatically extend for an additional one year unless
further extended or earlier terminated as provided in each
agreement. Each of the employment agreements provides for: (i) a base
salary of approximately $514,370 per year during the term of the agreements
(which salary may be increased but not decreased from time to time as determined
by the Compensation and Nominating Committee of the Company) and (ii)
eligibility for an annual bonus and other benefits provided under the Company’s
Executive Bonus Plan or other plans maintained by the Company, in such amounts
as determined by the Compensation and Nominating Committee, in its sole
discretion. Each of the employment agreements provide that each of
Steven L. Berman and Richard N. Berman are entitled to participate in other
employment benefits plans or arrangements generally available to executive
officers of the Company, four weeks paid vacation per year and the use of an
automobile and related expenses provided for by the Company. On April
1, 2008, Richard N. Berman and Steven L. Berman each had an annual base salary
of $514,370.
Under the
terms of the agreements, Richard N. Berman and Steven L. Berman will each
receive his then current salary, an annual payment in lieu of bonuses equal to
$150,000, and medical, dental, vision, and hospitalization insurance benefits
through the remaining term following termination without “Cause”, for “Good
Reason”, termination resulting from death or disability, or termination for any
reason within twelve (12) months following a “Change-in-Control”.
In the
event of termination for “Cause” or without “Good Reason,” each of Richard N.
Berman and Steven L. Berman shall be entitled to receive any earned or unpaid
salary through the date of termination, reimbursement of properly incurred
business expenses, payment for accrued and unused vacation days and payment for
any vested accrued benefits or other payments due under the
agreements.
“Cause”
means the occurrence of any one of the following as determined by our Board of
Directors: (i) the willful and continued failure by the Executive to attempt in
good faith substantially to perform his obligations under this Agreement (other
than any such failure resulting from the Executive’s incapacity due to a
Disability); provided, however, that the Company shall have provided the
Executive with written notice that such actions are occurring and, where
practical, the Executive has been afforded at least thirty (30) days to cure
same; (ii) the indictment of the Executive for, or his conviction of or plea of
guilty or nolo contendere to, a felony or any other crime involving moral
turpitude or dishonesty; or (iii) the Executive’s willfully engaging in
misconduct in the performance of his duties for the Company or other than in the
performance of his duties for the Company (including, but not limited to, theft,
fraud, embezzlement, and securities law violations or a violation of the
Company’s Code of Conduct or other written policies) that is materially
injurious to the Company, or, in the good faith determination of the
Compensation Committee, is potentially materially injurious to the Company,
monetarily or otherwise.
11
“Good
Reason” means the occurrence of any of the following events without the
Executive’s consent: (i) a material diminution of the authorities, duties or
responsibilities of the Executive set forth in the agreement; (ii) the loss of
any of the titles of the Executive with the Company set forth in the agreement ;
(iii) a reduction by the Company in the Executive’s Base Salary; (iv) a material
change in the Executive’s primary place of employment; (v) the failure by the
Compensation Committee to nominate or re-nominate the Executive to serve as,
with respect to Richard N. Berman, Chairman of the Board or, with respect to
Steven L. Berman, as a member of the Board or removal of the Executive as, with
respect to Richard N. Berman, Chairman of the Board or, with respect to Steven
L. Berman, as a member of the Board (other than as a result of or due to the
Executive’s death or Disability, because of a legal prohibition under applicable
law or regulation, or for “Cause,” as defined above); (vi) the assignment to the
Executive of duties or responsibilities which are materially inconsistent with
any of his duties and responsibilities set forth in the agreement; or (vii) a
change in the reporting structure so that the Executive reports to someone other
than as specified in the agreement; provided, however, that, within
ninety (90) days of any such event having occurred, the Executive shall have
provided the Company with written notice that such events have occurred and
afforded the Company thirty (30) days to cure same.
“Change
of Control” means the occurrence of any one of the following events (i) any
person or other entity (other than any of the Company’s subsidiaries or any
employee benefit plan sponsored by the Company or any of its subsidiaries)
including any person as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), becomes the beneficial owner, as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of more
than fifty percent (50%) of the total combined voting power of all classes of
capital stock of the Company normally entitled to vote for the election of
directors of the Company (the “Voting Stock”); (ii) the Board and/or the
shareholders of the Company approve the sale of all or substantially all of the
property or assets of the Company and such sale occurs; (iii) the Board and/or
the shareholders of the Company approve a consolidation or merger of the Company
with another entity (other than with any of the Company’s subsidiaries), the
consummation of which would result in the shareholders of the Company
immediately before the occurrence of the consolidation or merger owning, in the
aggregate, less than 50% of the Voting Stock of the surviving entity, and such
consolidation or merger occurs; or (iv) a change in the board of directors of
the Company occurs with the result that the members of the board on the
effective date of this Agreement (the “Incumbent Directors”) no longer
constitute a majority of such board of directors, provided that any person
becoming a director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest or the settlement
thereof, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose election or nomination for election
was supported by more than half of the then Incumbent Directors shall be
considered an Incumbent Director for purposes hereof.
Each of
the agreements also provide for non-solicitation and non-competition provisions
for the term of the agreements and two years thereafter. The
agreements also include standard confidentiality and trade secret provisions
typically included in agreements of this type.
12
Assuming
the termination of employment of these individuals as of April 1, 2008, Richard
N. Berman and Steven L. Berman would each be entitled to three years of salary
continuation equal to $514,370 per year payable in bi-weekly installments, an
annual payment in lieu of bonus of $150,000 for three years, and health benefits
continuation approximately equal to $11,000 per year for three
years. Total benefits payable upon termination of either agreement
would equal approximately $2,026,110 for each executive and would not begin
until the date six months after their respective dates of
termination.
We do not
provide pension benefits, post-employment health coverage, non-qualified defined
contribution or other deferred compensation plans to our executive officers
other than to the individuals discussed above. All of our other
employees, including our other executive officers, are employees-at-will and as
such do not have employment contracts with us, except in the case of certain
foreign subsidiaries.
We have
entered into a severance agreement with Mr. Barton, Senior Vice President and
Chief Financial Officer. Pursuant to the terms of the severance
agreement, Mr. Barton is entitled to six months of salary continuation in the
event of the termination of his employment without cause. Assuming
the termination of his employment without cause as of December 29, 2007, Mr.
Barton would be entitled to six months of salary continuation payment equal to
$140,289, payable in bi-weekly installments through June 27, 2008.
We have
entered into a severance agreement with Mr. Beretta, Senior Vice President,
Product. Pursuant to the terms of the severance agreement, Mr.
Beretta is entitled to six months of salary continuation in the event of the
termination of his employment without cause. Assuming termination of
employment without cause as of December 29, 2007, Mr. Beretta would be entitled
to six months of salary continuation payment equal to $139,248, payable in
bi-weekly installments through June 27, 2008.
Compensation
Discussion and Analysis
Overview
George L.
Bernstein, John F. Creamer, Jr., Paul R. Lederer and Edgar W. Levin are the
members of the Compensation and Nominating Committee and Mr. Levin is the
Committee Chairman. In this “Compensation Discussion and Analysis”
section, the terms “we”, “our”, “us”, and the “Committee” refer to the
Compensation Committee of the Board of Directors.
This
Compensation Discussion and Analysis focuses on our compensation philosophy and
objectives regarding executive compensation; the Committee’s role and
management’s role in establishing executive compensation; the components of our
executive compensation program; and the process of setting executive
compensation. Our executive compensation program is designed to
promote the successful implementation of our annual strategic plan as approved
by the Board of Directors as well as long-term growth and
profitability.
Executive
Compensation Philosophy and Objectives
The two
primary objectives of our executive compensation program are to attract and
retain executive talent to help ensure our future success and to reward our
executives for the successful achievement of corporate financial and other goals
(i.e. “pay for performance”). Our program creates an environment of
shared risk between our executive officers and our shareholders by including
equity based awards as part of our executive compensation program. We
believe that our “pay for performance” program should focus management’s
attention on achieving both annual performance targets and profitable growth
over a longer time period. The program is designed to reward
management for the achievement of both short and long term strategic objectives
as established by the Board of Directors.
13
The
executive compensation program should be substantial enough to attract and
retain skillful and knowledgeable management while at the same time being
mindful of our responsibility to control costs on behalf of our
shareholders. Our compensation philosophy reflects a commitment to
compensate executives competitively with other companies in the industry while
rewarding specific executives for achieving levels of operational excellence and
financial returns that ensure positive short and long-term business performance
and continual growth in shareholder value. We believe that the
overall compensation program must be competitive with other compensation
programs within our industry in order to attract and retain the qualified
individuals necessary to manage the Company and address the significant
challenges faced by it.
We
encourage our executives to think, act, and eventually become, shareholders
through our executive compensation program. We intend the program to
reward executives for taking well-measured risks with our capital in order to
generate returns for our shareholders. At the same time, we intend
our executives to share in the potential downside if such investments result in
poor performance.
We
believe that total amounts of compensation should generally reflect an
executive’s experience, skill, knowledge, responsibility and performance within
our company. Amounts should typically increase with increases in an
executive’s functional role and his or her ability to affect our company’s
performance results. As position and responsibility increase within
the Company, a greater portion of the executive’s total compensation becomes
performance based pay contingent upon the achievement of performance
objectives.
The
Committee’s Role in Establishing Executive Compensation
Our
responsibilities are outlined in a written charter which has been adopted by the
Board of Directors. A copy of this charter is available at www.dormanproducts.com
under Corporate Information – Investor Relations – Corporate Governance
documents. We are responsible for annually reviewing, approving and
recommending to the Board of Directors for its approval, the corporate goals and
objectives relevant to the Chairman and Chief Executive Officer and for
evaluating the performance of the Chairman and Chief Executive Officer in light
of those goals and objectives. With respect to compensation, we are responsible
for annually reviewing, approving and recommending to the Board of Directors for
its approval, the compensation of the Chairman and Chief Executive Officer and
the next four highest paid officers of the Company.
We also
approve participation in and all awards, grants and related actions under the
Dorman Incentive Stock Plan, the Employee Stock Purchase Plan and the 401(k)
Retirement Plan. In addition, we annually review and approve and
recommend to the Board of Directors, for its approval, any executive employment
agreements, severance arrangements, change in control arrangements, and any
special or supplemental benefits, in each case as, when, and if
appropriate.
We
typically meet once each fiscal year. Mr. Levin meets with the
General Counsel to establish a meeting agenda. We meet with the Chief
Executive Officer and with other senior members of management. We
will meet with the General Counsel or other outside advisors on an as needed
basis. We also meet in executive session without members of
management present.
In
preparation for our annual compensation committee meeting we review materials
provided by management which management believes will be helpful in the
performance of our duties. This material includes financial reports
on year-to-date performance; reports on performance against goals and objectives
approved by the Board of Directors; benchmarking information on compensation
programs and compensation levels at peer group companies; and reports on the
current compensation levels of our executive officers including base salary and
equity awards.
14
We
review, on an annual basis, the performance of the Committee and the
effectiveness of our compensation program in achieving the intended
outcome.
Management’s
Role in Establishing Executive Compensation
Management’s
most important role in the executive compensation process is to work together
with us to establish strategic plans and business performance targets and
objectives against which management will be measured. The Chief
Executive Officer provides us with his evaluations on the performance of the
other executive officers, performance evaluations of certain other key
employees, and recommends salary levels and option awards.
The
Components of the Executive Compensation Program
Elements
of compensation for our executives include base salary, bonus, equity incentive
in the form of stock options, 401(k) plan participation, an employee stock
purchase plan, perquisites and other benefits, and post-employment
compensation.
Base
Salary
We
establish and approve annual base salaries for the Chief Executive Officer and,
upon recommendation of the Chief Executive Officer, annual base salaries for all
of our executive officers of the Company. In deciding the amount of
annual base salaries, we take into consideration independent compensation
studies prepared periodically on our behalf. Although we do not
believe in establishing base salaries only on the basis of benchmarking, we do
believe that benchmarking reports are a useful salary evaluation
tool. We intend that overall compensation, including base salary,
reflect the performance of each individual executive over time. Base
salaries are set at levels that we determine adequately reward and retain
capable executives, including the Chief Executive Officer, without targeting any
specific quartile of any compensation survey data for total compensation or any
component of total compensation. In establishing base salary, we
consider the executive’s individual performance, the importance of and skills
required in a particular executive position, and the executive’s total amount of
experience.
Executive
Bonus Plan
We have
established the Executive Bonus Plan (the “Bonus Plan”). As of
December 29, 2007, the executive officers named in the Summary Compensation
Table and one other executive officer were eligible to participate in the Bonus
Plan. The Bonus Plan has three components: (i) an annual
bonus, (ii) a three-year compounded growth bonus, and (iii) a discretionary
bonus. The annual bonus and the three-year compounded growth bonus
are each based on the Company’s growth in pre-tax (pre-bonus) income subject to
adjustment as described in the Bonus Plan.
The
amount of the annual bonus is equal to the executive officer’s eligible bonus
amount, as set forth in the Bonus Plan, multiplied by two times the percentage
annual growth in our adjusted pre-tax income. The eligible bonus
amount for each of Richard N. Berman and Steven L. Berman is
$520,000. The eligible bonus amount for each of the other four
participating executive officers is $280,000. Amounts earned as
annual bonuses for the named executive officers are included in the Summary
Compensation Table under the column heading “Bonus.”
15
The
three-year compounded growth bonus component is based on our company’s growth in
adjusted pre-tax income over a three-year performance cycle. The
Bonus Plan provides for three three-year performance cycles: fiscal
2005 through fiscal 2007, fiscal 2006 through fiscal 2008 and fiscal 2007
through 2009. After the completion of a three-year cycle, the
participating officers will each receive a bonus payment of $50,000 if our
compounded three-year growth in pre-tax income is between 5.0% and 10.0%, a
payment of $100,000 if the pre-tax income increase is between 10.0% and 15.0%
and a payment of $150,000 if the pre-tax income increase is greater than
15%. No compounded growth bonus will be paid if the compounded
three-year growth in pre-tax income is below 5.0%. Amounts earned by
the named executive officers as three-year compounded growth bonuses for the
three-year performance cycle ended December 29, 2007 are included in the Summary
Compensation Table under the column heading “Bonus.”
Fifty
percent of an executive officer’s earned bonus pursuant to the annual bonus
component and the three-year compounded growth component will be paid in the
first quarter of the year following the year in which the bonus was earned; the
remaining fifty percent is paid in four equal quarterly installments 180, 270,
360 and 450 days after the fiscal year end. The executive officer
must be employed full-time on the scheduled date of payment to receive that
portion of the bonus.
In
addition, we have the authority to award discretionary bonuses pursuant to the
Bonus Plan to executive officers based upon the executive officer’s
contribution, responsibility and performance during the year. Amounts
earned as discretionary bonuses by the named executive officers are included in
the Summary Compensation Table under the column heading “Bonus.” Discretionary
bonus amounts are paid in the first quarter of the year following the year in
which the bonus was earned.
Long-Term
Incentive and Non-Qualified Stock Options
We
provide our executive officers with long-term incentives in the form of
incentive or non-qualified stock options granted under our Incentive Stock
Option Plan described above. We award stock options to the Chief
Executive Officer and the other executive officers based upon the recommendation
of the Chief Executive Officer, taking into consideration the responsibility of
each executive officer, the financial performance of the Company and such other
factors as we deem appropriate, consistent with our compensation
philosophy. However, we have not established specific target awards
governing the receipt, timing or size of option grants. Thus,
determinations with respect to the granting of stock options are subjective in
nature.
401(k)
Retirement Plan
Executive
officers are entitled to participate in the Company’s 401(k) Retirement Plan and
to receive a portion of the Company’s voluntary contribution in shares of the
Company’s common stock in accordance with the Plan.
Employee
Stock Purchase Plan
Executive
Officers are entitled to participate in the Company’s Employee Stock Purchase
Plan subject to the restrictions and limitations in the Plan. We
believe that our executive officers should acquire a vested interest in our
growth and earnings.
Post-Employment
Compensation
We have
entered into employment agreements and severance agreements described in this
Proxy Statement above consistent with our efforts to attract and retain
qualified executives. We continue to compete for executive-level
talent in an industry where employment agreements with change-in-control and
termination payments, as well as severance plans or agreements, are typically
provided to executives. In addition, since we do not have employment
agreements with our executives (except for the employment agreements discussed
in this Proxy Statement above), we believe the severance agreements will
encourage participating executives to remain in our employ and permit such
individuals to remain focused on the Company’s strategic business objectives
during the course of their employment by providing at least some relief from
concerns related to job security.
16
We have
entered into employment agreements with Richard N. Berman and Steven L. Berman
described in this Proxy Statement above. Assuming the termination of
employment of these individuals as of April 1, 2008, Richard N. Berman and
Steven L. Berman would each be entitled to three years of salary continuation
equal to $514,370 per year payable in bi-weekly installments, an annual payment
in lieu of bonus of $150,000 for three years, and health benefits continuation
approximately equal to $11,000 per year for three years. Total
benefits would equal approximately $2,026,110 for each executive and would not
begin until the date six months after their respective dates of
termination.
We do not
provide pension benefits, post-employment health coverage, non-qualified defined
contribution or other deferred compensation plans to our executive officers
other than as described in the individual employment agreements discussed in
this Proxy Statement above. Our employees, including our executive
officers, are employees-at-will and as such do not have employment contracts
with us, except in the case of Richard N. Berman and Steven L. Berman and
employees of certain foreign subsidiaries. We have, however, entered
into certain individual employment agreements or severance arrangements with
some of our executive officers as more fully described in this Proxy Statement
above.
Perquisites
and Other Benefits
We
annually review the perquisites that our executive officers
receive. The President receives the use of a leased automobile for
which the lease and the insurance are paid by the Company. The
remaining senior executives receive an auto allowance. All members of
senior management are eligible to participate in our Company’s other benefits
plans on the same terms as other employees. These plans include
medical and dental insurance, life insurance, 401(k) Retirement Plan, and the
Employee Stock Purchase Plan. Relocation benefits are generally
reimbursed pursuant to our relocation benefits policy but may be individually
negotiated on an as needed basis.
The
Process of Establishing Executive Compensation
Although
we typically have only one formal meeting at the end of each fiscal year, our
executive compensation evaluation process is continuous. We begin by
reviewing and recommending to the Board of Directors for its approval the
corporate goals and objectives for the Chief Executive Officer and other members
of the senior management team. This process includes open
communications with the Chief Executive Officer regarding the sufficiency of the
strategic plan and other performance targets. Performance objectives
for management are typically based on, among other things, growth in pre-tax
income annually and over a longer term.
Although
we do not believe in setting compensation levels based on benchmarking, we do
periodically acquire reports of senior management compensation at companies that
offer products similar to ours. We use these reports as one source of
information, but not as a primary factor in setting executive compensation
levels because no company that publicly reports executive compensation levels is
similar to our Company in size and profitability. We did not acquire
a benchmarking report for the fiscal 2008 executive compensation
process. Our most recent benchmarking report acquired for fiscal 2007
executive compensation evaluation process included compensation amounts paid at
companies of similar size in the automotive aftermarket
segment.
17
We also
consider other relevant factors such as historical compensation amounts;
competitive pay practices generally; relative compensation levels among our
senior management team; and general economic conditions. After
considering our corporate goals and objectives along with all other relevant
factors, we establish compensation levels for each of the senior executive
officers.
Compensation
and Nominating Committee Report
In
December 2007, the Compensation and Nominating Committee met with management to
review and discuss the Compensation Discussion and Analysis. Based
upon the review and discussions referred to above, the Compensation and
Nominating Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in our Annual Report on Form 10-K for the
year ended December 29, 2007 and the proxy statement on Schedule 14A for the
2008 annual meeting of shareholders.
This
Compensation and Nominating Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporates by reference all or any portion of this Proxy Statement, except to
the extent that we specifically request that the Report be specifically
incorporated by reference.
The
foregoing report has been furnished by the Compensation and Nominating
Committee:
|
Edgar
W. Levin, Chairman
|
John
F. Creamer
|
|
George
L. Bernstein
|
Paul
R. Lederer
|
Compensation
Committee Interlocks and Insider Participation
The
Compensation and Nominating Committee consisted of George L. Bernstein, John F.
Creamer, Jr., Paul R. Lederer and Edgar W. Levin in the fiscal year ended
December 29, 2007. No person who served as a member of the
Compensation and Nominating Committee during the fiscal year ended December 29,
2007 was a current or former officer or employee of the Company or engaged in
certain transactions with the Company required to be disclosed by regulations of
the SEC. Additionally, there were no compensation committee
“interlocks” during this period, which generally means that no executive officer
of the Company served as a director or member of the compensation committee of
another entity, one of whose executive officers served as a director or member
of the Compensation Committee of the Company.
Certain
Relationships and Related Transactions
We have
entered into a noncancelable operating lease for our primary operating facility
in Colmar, Pennsylvania with BREP I, a Pennsylvania limited partnership of which
Richard N. Berman, Chairman of our Board of Directors and Chief Executive
Officer, Steven L. Berman, a director our President, Secretary and Treasurer,
their father, Jordan S. Berman, and their brothers, Marc H. Berman and Fred B.
Berman, are limited partners. Richard N. Berman and Steven L. Berman
are the controlling shareholders of BREP, Inc., a Pennsylvania corporation,
which is the general partner of BREP I. Jordan S. Berman, Marc H.
Berman and Fred B. Berman are each directors and officers of BREP,
Inc. Richard N. Berman and Steven L. Berman each own a 27.9% interest
in BREP I. Under the lease, the Company paid rent of $4.00 per square
foot ($1.3 million per year) in 2007. The rents payable on the
Pennsylvania property are adjusted on January 1 of each year to reflect annual
changes in the Consumer Price Index for All Urban Consumers – U.S. City Average,
All Items. The lease is a “net” lease, under which the Company is
responsible for all expenses attributable to the leased property (including
maintenance and repair) and for the conduct of its operations in compliance with
all applicable laws and regulations. In December of 2007, the lease
was extended and will expire on December 28, 2012. The Company’s rent
in 2008 will be $4.10 per square foot ($1.3 million per year). In the
opinion of the Company’s Audit Committee which approved the lease extension
agreement, the terms of this lease are no less favorable than those which could
have been obtained from an unaffiliated party.
18
The Audit
Committee is responsible for reviewing and approving all related party
transactions pursuant to the Audit Committee Charter which has been adopted by
the Board of Directors. A copy of the Audit Committee Charter is
available on our website at www.dormanproducts.com. The
Chairman of the Audit Committee can be reached by sending a letter to Chairman
of the Audit Committee, Confidential – Conduct of Business Affairs at: Dorman
Products, Inc., P.O. Box 1800, 3400 East Walnut Street, Colmar, PA,
18915
Report
of Audit Committee
In
February 2008, the Audit Committee met with management to review and discuss the
audited financial statements for the year ended December 29,
2007. The Audit Committee also conducted discussions with its
independent registered public accounting firm, KPMG LLP (“KPMG”), regarding the
matters required by the Statement on Auditing Standards No. 114. As
required by Independence Standards Board Standard No. 1, “Independence
Discussion with Audit Committees,” the Audit Committee has discussed with and
received the required written disclosures and a confirming letter from KPMG
regarding its independence and has discussed with KPMG its
independence. The Audit Committee also considered the non-audit
services provided by KPMG set forth below in their review of KPMG’s
independence. Based upon the review and discussions referred to
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the year ended December 29, 2007.
This
Audit Committee Report shall not be deemed incorporated by reference in any
document previously or subsequently filed with the SEC that incorporates by
reference all or any portion of this proxy statement, except to the extent that
we specifically request that the Report be specifically incorporated by
reference.
The
foregoing report has been furnished by the Audit Committee:
|
George
L. Bernstein, Chairman
|
Paul
R. Lederer
|
|
John
F. Creamer, Jr.
|
Edgar
W. Levin
|
19
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth the beneficial ownership of the Company’s Common
Stock as of March 28, 2008 by (i) each director and nominee for director, (ii)
each person who we know to be the beneficial owner of more than 5% of the Common
Stock, (iii) each executive officer named in the Summary Compensation Table
contained in this Proxy Statement, and (iv) all directors, director nominees and
executive officers as a group. Except as otherwise indicated, to our
knowledge, the beneficial owners of the Common Stock listed below have sole
investment and voting power with respect to such shares. The business
address of our directors, director nominees and executive officers is that of
the Company.
|
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership (1)
|
Percent
|
||||||||
|
Steven
L. Berman (2)
|
2,685,214 | (3 | )(4) | 15.1 | % | |||||
|
Richard
N. Berman (2)
|
2,516,115 | (3 | )(5) | 14.2 | % | |||||
|
Jordan
S. Berman (2)
|
1,361,544 | (3 | )(6) | 7.6 | % | |||||
|
Royce
& Associates, LLC.
|
2,036,441 | (9 | ) | 11.5 | % | |||||
|
Bank
of America Corporation,
|
||||||||||
|
NB
Holdings Corporation,
|
||||||||||
|
Bank
of America, NA,
|
||||||||||
|
Columbia
Management Group, LLC, and
|
||||||||||
|
Columbia
Management Advisors, LLC
|
1,066,664 | (8 | ) | 6.0 | % | |||||
|
Dimensional
Fund Advisors LP.
|
1,257,568 | (10 | ) | 7.1 | % | |||||
|
T.
Rowe Price Associates, Inc., and T. Rowe Price Small-Cap Value Fund,
Inc.
|
1,196,400 | (7 | ) | 6.7 | % | |||||
|
Mathias
J. Barton
|
194,482 | (11 | ) | * | ||||||
|
Edgar
W. Levin
|
66,600 | (12 | ) | * | ||||||
|
George
L. Bernstein
|
58,700 | (13 | ) | * | ||||||
|
Paul
R. Lederer
|
72,625 | (14 | ) | * | ||||||
|
John
F. Creamer, Jr.
|
49,125 | (15 | ) | * | ||||||
|
Joseph
M. Beretta
|
78,666 | (16 | ) | * | ||||||
|
Fred
V. Frigo
|
102,389 | (17 | ) | * | ||||||
|
Executive
officers and directors as a group (9 persons)
|
5,823,916 | (18 | ) | 33 | % | |||||
* Denotes
less than 1%.
|
(1)
|
The
securities “beneficially owned” by a person are determined in accordance
with the definition of “beneficial ownership” set forth in the regulations
of the Securities and Exchange Commission (the “SEC”) and, accordingly,
may include securities owned by or for, among others, the spouse, children
or certain other relatives of such person as well as other securities as
to which the person has or shares voting or investment power or has the
right to acquire within 60 days of March 28, 2008. The same
shares may be beneficially owned by more than one
person. Beneficial ownership may be disclaimed as to certain of
the securities. Fractional shares are rounded up to the closest
whole number. Share numbers in the table may, as indicated in
the appropriate notes, include share units held for the person’s account
in the Company’s 401(k) Plan as of March 28,
2008.
|
|
(2)
|
Pursuant
to the Amended and Restated Shareholders’ Agreement, dated as of July 1,
2006 (the “Shareholders’ Agreement”), among Richard N. Berman, Steven L.
Berman, their father Jordan S. Berman, their brothers Marc H. Berman and
Fred B. Berman, their mother Deanna Berman and the additional shareholders
named therein, except as otherwise provided in the Shareholders’ Agreement
with respect to Jordan S. Berman and Deanna Berman, each shareholder has
granted the others rights of first refusal, exercisable on a pro rata
basis or in such other proportions as the exercising shareholders may
agree, to purchase shares of Common Stock of the Company which any of
them, or upon their deaths their respective estates, proposes to sell to
third parties. The Company has agreed with these shareholders
that, upon their deaths, to the extent that any of their shares are not
purchased by any of these surviving shareholders and may not be sold
without registration under the Securities Act of 1933, as amended (the
“1933 Act”), the Company will use its best efforts to cause those shares
to be registered under the 1933 Act. The expenses of any such
registration will be borne by the estate of the deceased
shareholder. The additional shareholders are trusts for which
either Richard N. Berman, Steven L. Berman, Marc H. Berman or Fred B.
Berman act as trustee for the benefit of their own
children.
|
20
|
(3)
|
Steven
L. Berman, Richard N. Berman and Jordan S. Berman share with each other
voting and dispositive power with respect to the following shares of
Common Stock: (i) 161,800 shares held by BREP I, a Pennsylvania
limited partnership (“BREP I”); and (ii) 190,200 shares held by BREP III,
a Pennsylvania limited partnership (“BREP III,” and together with BREP I,
the “Partnerships”). The general partner of each of the
Partnerships is BREP, Inc., a Pennsylvania corporation. Steven
L. Berman and Richard N. Berman are each a limited partner of each of the
Partnerships and a controlling shareholder of BREP, Inc. Jordan
S. Berman is the President, a director and a shareholder of BREP,
Inc.
|
|
(4)
|
Includes: (i)
2,079,839 shares held directly; (ii) 123,577 shares held by the Steven L.
Berman Grantor Retained Annuity Trusts (the “Steven L. Berman GRATS”);
(iii) 64,723 shares held by The Steven L. Berman Charitable Remainder
Trusts (the “Steven L. Berman CRUTS”); and (iv) 48,583 shares held by
three different trusts, each dated October 27, 2003, for the benefit of
Steven L. Berman’s children (together, the “Steven L. Berman
Trusts”). Steven L. Berman is the trustee for each of the
Steven L. Berman GRATS, the Steven L. Berman CRUTS and the Steven L.
Berman Trusts, in which capacity he has the sole power to vote and dispose
of the shares held. Steven L. Berman has the right to direct
the trustee of the Company’s 401(k) Plan as to the voting of 16,492 shares
of Common Stock held for his account in the 401(k) Plan; he does not have
dispositive power over these shares. Excludes 4,735,996 shares
that may be deemed beneficially owned by the shareholders party to the
Shareholders’ Agreement (as defined in note (2) above) other than Steven
L. Berman, as to all of which shares he disclaims beneficial
ownership.
|
|
(5)
|
Includes: (i)
1,862,159 shares held directly; (ii) 123,577 shares held by the Richard N.
Berman Grantor Retained Annuity Trusts (the “Richard N. Berman GRATS”);
(iii) 64,723 shares held by The Richard N. Berman Charitable Remainder
Trusts (the “Richard N. Berman CRUTS”); (iv) 97,164 shares held by six
different trusts, each dated October 27, 2003, for the benefit of each of
Richard N. Berman’s children (together, the “Richard N. Berman Trusts”);
and (v) 1,400 shares held in custody for his child. Richard N.
Berman is the trustee for each of the Richard N. Berman GRATS, the Richard
N. Berman CRUTS and the Richard N. Berman Trusts, in which capacity he has
the sole power to vote and dispose of the shares held. Richard
N. Berman has the right to direct the trustee of the Company’s 401(k) Plan
as to the voting of 16,492 shares of Common Stock held for his account in
the 401(k) Plan; he does not have dispositive power over these
shares. Excludes 4,905,095 shares that may be deemed
beneficially owned by the shareholders party to the Shareholders’
Agreement (as defined in note (2) above) other than Richard N. Berman, as
to all of which shares he disclaims beneficial
ownership.
|
|
(6)
|
Includes
242,194 shares owned by Jordan S. Berman’s spouse, Deanna Berman, as to
all of which shares he disclaims beneficial ownership. Jordan
S. Berman may be deemed to have sole voting and dispositive power over the
242,194 shares owned by his spouse. The above amount includes
175,000 shares pledged as security and collateral in connection with a
guarantee made on behalf of a family member. The above amount
excludes the following shares, as to all of which shares Jordan S. Berman
disclaims beneficial ownership: (i) 75,600 shares held by The
Jordan and Deanna Berman Family Charitable Foundation, for which Jordan S.
Berman serves as a trustee; and (ii) 6,059,666 shares that may be deemed
beneficially owned by the shareholders party to the Shareholders’
Agreement (as defined in note (2) above) other than Jordan S.
Berman. The address of Jordan S. Berman is c/o Dorman Products,
Inc., 3400 East Walnut Street, Colmar, Pennsylvania
18915.
|
|
(7)
|
Based
solely on a Schedule 13G filed with the SEC on February 14 , 2008 by T.
Rowe Price Associates, Inc. (“Price Associates”) and T. Rowe Price
Small-Cap Value Fund, Inc. (“Price Small-Cap” and together with Price
Associates, “T. Rowe Price”). The filing indicates that, as of
December 31, 2007, (i) Price Associates had sole voting power with respect
to 161,400 shares, shared voting power over no shares, sole dispositive
power over 1,196,400 shares and shared dispositive power over no shares,
and (ii) Price Small-Cap had sole voting power over 1,035,000 shares and
did not have shared voting power, sole dispositive power or shared
dispositive power over any shares. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates and Price Small-Cap, respectively, are deemed to be beneficial
owners of such securities; however, Price Associates and Price Small-Cap
each disclaim that it is, in fact, the beneficial owner of such
securities. The address of T. Rowe Price is 100 E. Pratt
Street, Baltimore, Maryland
21202.
|
21
|
(8)
|
Based
solely on a Schedule 13G/A filed with the SEC on February 7, 2008 by Bank
of America Corporation (“Bank of America Corp.”), NB Holdings Corporation
(“NB”), Bank of America, NA (“Bank of America, NA”), Columbia Management
Group, LLC (“Columbia Group”) and Columbia Management Advisors, LLC
(“Columbia Advisors” and together, “Bank of America”). The
filing indicates that, as of December 31, 2007: (i) Bank of America Corp.
had sole voting power over no shares, shared voting power over 746,659
shares, sole dispositive power over no shares and shared dispositive power
over 1,066,664 shares; (ii) NB had sole voting power over no shares,
shared voting power over 746,659 shares, sole dispositive power over no
shares and shared dispositive power over 1,066,664 shares; (iii) Bank of
America, NA had sole voting power over 3,789 shares, shared voting power
over 742,870 shares, sole dispositive power over 3,789 shares and shared
dispositive power over 1,062,875 shares; (iv) Columbia Group had sole
voting power over no shares, shared voting power over 742,870 shares, sole
dispositive power over no shares and shared dispositive power over
1,062,875 shares; and (v) Columbia Advisors had sole voting power over
742,870 shares, shared voting power over no shares, sole dispositive power
over 1,056,939shares and shared dispositive power over no
shares. The address of Bank of America is 100 North Tryon
Street, Floor 25, Bank of America Corporate Center, Charlotte, North
Carolina 28255.
|
|
(9)
|
Based
solely on a Schedule 13G/A filed with the SEC on January 28, 2008 by Royce
& Associates, LLC (“Royce”). The filing indicates that, as
of December 31, 2007, Royce had sole voting power over 2,036,441 shares,
shared voting power over no shares, sole dispositive power over 2,036,441
shares and shared dispositive power over no shares. The address
of Royce is 1414 Avenue of the Americas, New York, New York
10019.
|
|
(10)
|
Based
solely on a Schedule 13G/A filed with the SEC on February 6, 2008 by
Dimensional Fund Advisors LP (formerly Dimensional Fund Advisors Inc.)
(“Dimensional”). The filing indicates that, as of December 31,
2007, Dimensional had sole voting power over 1,257,568 shares, shared
voting power over no shares, sole dispositive power over 1,257,568 shares
and shared dispositive power over no shares. The address of
Dimensional is 1299 Ocean Avenue, Santa Monica, CA
90401.
|
|
(11)
|
Includes: (i)
123,000 shares subject to options exercisable as of the Record Date and
9,000 shares subject to options exercisable within 60 days of the Record
Date, (ii) 1,302 shares held for his account in the Company’s 401(k) Plan,
and (iii) 400 shares held in trust for the benefit of Mr. Barton’s
children.
|
|
(12)
|
Includes: (i)
48,000 shares subject to options exercisable as of the Record
Date.
|
|
(13)
|
Includes:
(i) 52,000 shares subject to options exercisable as of the Record
Date.
|
|
(14)
|
Includes
(i) 44,000 shares subject to options exercisable as of the Record Date and
6,000 shares subject to options exercisable within 60 days of the Record
Date.
|
|
(15)
|
Includes
(i) 4,800 shares subject to options exercisable as of the Record Date and
1,200 shares subject to options exercisable within 60 days of the Record
Date.
|
|
(16)
|
Includes:
(i) 78,666 shares subject to options exercisable as of the Record
Date.
|
|
(17)
|
Includes:
(i) 84,000 shares subject to options exercisable as of the Record
Date.
|
|
(18)
|
Includes:
(i) 450,666 shares subject to options exercisable as of the Record Date
and within 60 days of the Record Date and (ii) 40,875 shares held for the
accounts of the Company’s executive officers in the Company’s 401(k)
Plan.
|
22
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, and the rules
thereunder require our officers and directors and persons who own more than 10%
of our common stock to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and the NASDAQ Stock Market and to
furnish the Company copies.
Based on
its review of the copies of such forms received by it, or written representation
from certain reporting persons, we believe that all filing requirements
applicable to our officers, directors and greater than 10% beneficial owners
were complied with during the last fiscal year.
Shareholder
Proposals
Proposals
by shareholders to be presented at our meeting to be held in 2009 must be
received by us no later than December 5, 2008 in order to be considered for
inclusion in our proxy statement and form of proxy for that
meeting. Any such proposal must also comply with the proxy rules
under the Exchange Act, including Rule 14a-8.
In
addition, shareholders are notified that the deadline for providing us timely
notice of any shareholder proposal to be submitted outside of the Rule 14a-8
process for consideration at our 2009 annual meeting of shareholders is not less
120 days prior to the date one year from the date of the Annual Meeting held in
2008. Any such notice must comply with our Amended and Restated
By-Laws, a copy of which may be obtained on our website located at www.dormanproducts.com. As
to all such matters which we do not have notice on or prior to such date,
discretionary authority shall be granted to the persons designated in our proxy
statement related to the 2009 annual meeting of shareholders to vote on such
proposal.
Annual
Report
A copy of
our Annual Report to Shareholders for the fiscal year ended December 29, 2007 is
being furnished concurrently with this Proxy Statement at http://www.stocktrans.com/eproxy/dorman2008. The
Annual Report should not be regarded as proxy soliciting material.
A copy of
our Annual Report on Form 10-K for the fiscal year ended December 29, 2007 can
also be obtained without charge by writing to Dorman Products, Inc., 3400 East
Walnut Street, Colmar, Pennsylvania 18915, Attn: Thomas J. Knoblauch, Assistant
Secretary. We also makes available, free of charge, on our website
located at www.dormanproducts.com,
our Annual Report on Form 10-K, including all amendments thereto, if
any.
Solicitation
of Proxies
We will
pay all expenses incurred in connection with the solicitation of proxy
cards. In addition to solicitation by mail, our officers, directors
and regular employees, who will receive no additional compensation for their
services, may solicit proxies in person or by telephone or
facsimile. We have requested that brokers and nominees who hold stock
in their names furnish this proxy material to their customers; we will reimburse
these brokers and nominees for their out-of-pocket and reasonable
expenses.
Although
it is not anticipated, we reserve the right to retain a professional firm of
proxy solicitors to assist in solicitation of proxies. We estimate
that we would be required to pay such firm fees ranging from $7,500 to $15,000
plus out-of-pocket expenses.
23
Independent
Registered Public Accounting Firm
The
accounting firm of KPMG LLP acted as our independent registered public
accounting firm for the fiscal year ended December 29, 2007 and has been
selected by the Audit Committee of the Board of Directors to serve as our
independent registered public accounting firm for the fiscal year ending
December 27, 2008. A representative of KPMG LLP is expected to be
present at the Annual Meeting and to have the opportunity to make a statement,
if he desires to do so, and is expected to be available to respond to
appropriate questions.
Principal
Accountant Fees and Services
Aggregate
fees for professional services rendered for the Company by KPMG LLP as of or for
the fiscal years ended December 29, 2007 and December 30, 2006
were:
|
Fiscal
Year Ended
|
||||||||
|
Services
Rendered (1)
|
December
29, 2007
|
December
30, 2006
|
||||||
|
Audit
Fees
|
$ | 473,500 | $ | 478,500 | ||||
|
Audit
Related Fees
|
– | – | ||||||
|
Tax
Fees
|
102,435 | 110,940 | ||||||
|
All
Other Fees
|
1,500 | 1,500 | ||||||
|
Total
|
$ | 577,435 | $ | 590,940 | ||||
(1) The
aggregate fees included in Audit Fees are fees billed for the fiscal
years. The aggregate fees included in each of the other categories
are fees billed in the
fiscal years.
Audit
Fees. Audit fees for the fiscal years ended December 29, 2007
and December 30, 2006 were for professional services rendered for the audits of
our consolidated financial statements, and for the attestation of our internal
control over financial reporting as required by the Sarbanes-Oxley Act of 2002,
quarterly reviews, issuance of consents, and assistance with review of documents
filed with the SEC.
Audit Related
Fees. Audit related fees are for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under “Audit
Fees.” There were no audit related fees for the fiscal years ended
December 29, 2007 and December 30, 2006.
Tax
Fees. Tax fees for the fiscal years ended December 29, 2007
and December 30, 2006 were for services relating to tax preparation services and
tax advice and planning other than those directly related to the audit of the
income tax accrual.
All Other
Fees. All other fees for the fiscal years ended December 29,
2007 and December 30, 2006 were for the annual subscription for accounting
software we used.
The Audit
Committee has considered and determined that the services provided by KPMG LLP
are compatible with KPMG LLP maintaining its independence.
24
Pre-Approval
Policies and Procedures
The Audit
Committee Charter provides that one of the Audit Committee’s responsibilities is
pre-approval of all audit, audit related, tax services and other services
performed by the independent registered public accounting
firm. Unless the specific service has been previously pre-approved
with respect to that year, the Audit Committee must approve the permitted
service before the independent registered public accounting firm is engaged to
perform it. The Audit Committee pre-approved all of the audit and
non-audit services provided by KPMG LLP to us during the fiscal years ended
December 29, 2007 and December 30, 2006.
Other
Matters
As of the
date of this Proxy Statement, no other matter is known which will be brought
before the Annual Meeting. However, the enclosed proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the meeting: (i) matters that our Board of
Directors does not know, 10 calendar days after notice of the meeting is mailed,
are to be presented for approval at the meeting; (ii) approval of the minutes of
a prior meeting of shareholders, if such approval does not constitute
ratification of the action at the meeting; (iii) the election of any person to
any office for which a bona fide nominee is unable to serve or for good cause
will not serve; (iv) any proposal omitted from this Proxy Statement and the form
of proxy pursuant to Rule 14a-8 or Rule 14a-9 under the Exchange Act, as
amended; and (v) matters incidental to the conduct of the meeting. If
any such matters come before the meeting, the proxy agents named in the
accompanying proxy card will vote in accordance with their best judgment and
discretion.
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By
Order of the Board of Directors
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/s/ Thomas J. Knoblauch
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Thomas
J. Knoblauch
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Vice
President, General Counsel and
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Assistant
Secretary
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Colmar,
Pennsylvania
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April
11, 2008
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